Fed rep says regional economy getting better

SPRINGFIELD — For the fifth consecutive year, the message from the Federal Reserve Board has remained consistent — the economy is continuing to see improvements, although some factors embedded in those indicators make the comeback occurring at a cautious rate.

Luke Tilley, officer and economic advisor for the Federal Reserve Bank of Philadelphia, told an audience at the Springfield Country Club last week that the national economy can only be described as a consternation.

“We’ve got (Gross Domestic Product) pointing one direction and the jobs data and almost every other indicator pointing more positive,” he said at the event hosted by the Delaware County Chamber of Commerce. “There are still issues facing the economy even though unemployment is down to almost normal levels.”

Tilley said the first quarter of this year was sharply negative because of the winter, although a turnaround is expected when the second quarter figures are released later this month.

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“Most people are believing that we are going to see a bounceback in the second quarter,” he said.

Retail sales, a part of consumer spending, are starting an upward climb, but would be more significant if Americans’ wages were higher across the board.

According to the U.S. Census Bureau, retail sales were $439 billion for June, which was 0.2 percent higher than May and a 4.3 percent increase over a year ago.

“Things are progressing,” Tilley said, “but feeling a little bit different than they did before.”

One area showing great promise is the job growth figures.

“This is the single best news that we have for the U.S. economy,” Tilley said. “This is the strongest indicator that we have that the economy is picking up.”

At the national level, the average monthly job growth was 174,000 jobs in 2011; 186,000 in 2012; 194,000 in 2013; and 231,000 for this year.

These figures have been exceptionally strong and helped pull the economy through what was a slowdown in the winter, Tilley explained.

In Pennsylvania, 56,700 jobs were created this year through June with a burst of 17,700 in the education and health care sector and 15,000 in construction and mining. Tilley said the education and health care jobs were mostly in health care and despite the Marcellus Shale developments, the construction and mining category had a large gain in construction work.

In the Philadelphia region, the largest numbers of job growth went to 13,000 in education and health care and 6,800 in leisure and hospital, from January through June.

Unemployment continues a steady decline as the national figure stands at 6.1 percent.

“That is not a very high unemployment rate,” Tilley said, adding that it had peaked at 10 percent after the recession. “We’re actually getting very close to the normal range.”

He warned, however, that this 6.1 percent is not the same as the pre-recession 6.1 percent, as there are higher levels of people who have been unemployed for at least six months, prevalence of discouraged workers and slower wage growth.

Within the Philadelphia five-county region, unemployment is 5.9 percent and Pennsylvania’s is 5.6 percent.

Outlook from the regional manufacturers seems to indicate some optimism as higher numbers, about 24 percent, are saying that activity is increasing from last month, which Tilley said is the highest percentage since 2011. That number increases to 58 percent when the forecast is extended to the upcoming six months.

With housing in Philadelphia and Delaware County, the average home price remains below average but the other statistics are moving in the right direction, Tilley said.

The number of homes in short sales and in foreclosures are starting to decrease, he said.

In addition, inflation is starting to inch up, although Tilley explained that won’t be high until wages start to pick up a little more faster.

“I think Pennsylvania and the Philadelphia metropolitan area are actually doing quite well with job growth but with the long term unemployment that we do have, even though the unemployment rate has come down and some of the jobs that are being created, people are not getting the same job that they had before, it can still feel like a recession, but things have improved,” he said.